EURJPY Signaling Bullish Continuation

Technical Bias: Bullish

Key Takeaways

• Euro managed to trade higher against the Japanese yen as the latter one suffered heavy losses yesterday.

• EURJPY pair broke an important resistance area which might encourage the Euro buyers in the short term.

• EURJPYsupport seen at 137.45and resistance ahead at 137.92.

The Euro dropped heavily against the US dollar after the FOMC meeting minutes, but managed to sustain gains against the Japanese yen and looks set to continue trading higher.

Technical Analysis

There was an important bearish trend line formed on the 4 hour timeframe for the EURJPY pair, which was broken recently. The most important point to note is that the pair also managed to clear the 50% Fibonacci retracement level of the last drop from the 138.29 high to 135.71 low.Moreover, it is now trading above all three key simple moving averages (200, 100 and 50), which is signaling that the Euro bulls area here to stay. The EURJPY pair might consolidate around the current levels for some time before heading towards the next possible resistance area i.e. the 61.8% fib retracement level. Any further gains might take the pair towards the 76.4% fib level.

On the downside, the pair might find support around the broken trend line. However, the most important support can be seen around the 200 SMA (4H) which is currently at 137.25.

Euro Zone Manufacturing and Service PMI

There are several important economic releases lined up later during the London session, including the German manufacturing and services PMI, Frenchmanufacturing and services PMI and the Euro zone manufacturing and services PMI. All these economic releases might have a major effect on the Euro. Any disappointing reading could increase the bearish pressure moving ahead.

Overall, as long as the pair is trading above the 200 SMA (4H) more gains are favored in the near term.